Post Gives Us the Bad News on Medicare, Good News May Reduce Pressure for Change

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Saturday, 01 June 2013 07:51

The Washington Post long ago eliminated any distinction between news and opinion in its reporting on Social Security and Medicare. Keeping with this pattern, it ran a front page editorial that gave us the bad news from the Medicare and Social Security trustees reports released yesterday.

"And on Friday, analysts worried that the sunnier projections, together with an improving economy and a rapidly shrinking federal budget deficit, could serve to further dampen enthusiasm in Washington for tackling the nation’s toughest fiscal problems."

Of course not all "analysts" were worried about the modest improvement shown in the Medicare trustees report and the modest improvement in the economy delaying action on "the nation's toughest fiscal problems." That was only the view of analysts whose views the Post chose to present to readers. Other analysts would have pointed out that Medicare costs are more a problem of the broken U.S. health care system (we pay more than twice as much per person for our health care than people in other wealthy countries) than a fiscal problem.

Other analysts would have also pointed out that the impact of the tax increases potentially needed to fund these programs on the living standards of most workers are swamped by the impact of the upward redistribution of income that we have been seeing over the last three decades. To obscure this fact the Post included a comment from the two public trustees, Robert Reischauer and Charles Blahous that could only have the effect of misleading the overwhelming majority of readers:

"'Even if a Social Security solution were enacted today and effective immediately, it would require financial corrections that are substantially more severe than those enacted' in the last major reforms to Social Security in 1983, they wrote in a message included in the report."

It is highly unlikely that even one percent of the Post's readers know the extent of the reforms implemented in 1983. It is possible that they do remember the tax increases and benefits cuts that were put in place in the 1980s. Most of these had already been in law, although they were moved forward by the 1983 reforms. The payroll tax for Social Security was increased by 2.24 percentage points over the course of the decade. In addition, the self-employed were required to pay the employer side of the tax as well. Since roughly 9 percent of the workforce is self-employed, this amounts to the equivalent of a 2.8 percentage point increase in the tax.

In addition, the Medicare tax was also increased by 1.9 percentage points over the course of the decade. This brings the total tax increase to 4.7 percentage points. Also, the age for collecting full benefits for Social Security was increased from 65 to 67. This increase is being phased in for people reaching age 62 in the years 2002 to 2022.

If Congress were to implement changes to the programs comparable to the ones that were actually put in place in the decade of the 1980s, it would be more than sufficient to keep them fully funded for the rest of the century according to the most recent trustees reports. If the Post had written a news story intended to inform readers it would have pointed this fact out as a clarification of the comments by Reischauer and Blahous, if it included their comments at all.

However, since this piece was written to promote the Post's agenda of pushing cuts in these programs, it opted not to put the Reischauer-Blahous statement in a context that would have made it understandable to most readers.